Vadilal growing at 26%: Gandhi

He sells more cups & cones to ice-cream lovers than the No. 2 brand, Kwality Walls, and believes that impulse buying is the way forward for the industry. Rajesh Gandhi , the 51-year-old MD of Vadilal Industries, says that ice-cream has broken psychological barrier and is no longer considered a luxury product. Rural India will soon indulge and chart the next growth phase for the industry, he hopes. In an interview with Shramana Ganguly Mehta , Gandhi says "ice-cream flows in his blood" and all he is concerned about is the reach. Excerpts:

After the "Pure Happinezz" campaign in 1993, Vadilal could not keep up the pace. What went wrong?

It was a tough time for ice-cream makers between 1995 and to 2003. Amul had launched a price war, offering ice-creams 80% cheaper. There was chaos and we too lost focus. The only challenge was to survive. It took a toll on our marketing and brandbuilding . Our ad spent fell to 3% from 8% of our turnover. We could not have afforded to continue the way we did at the cost of losing the market share. Hence, Vadilal went low on visibility. However, we safeguarded our market share even during those troubled times and emerged stronger.

How could you afford staying away from the consumer's psyche?

While Vadilal was not seen on hoardings or TVCs, we worked silently to grow the brand. Today, Vadilal is number two brand in terms of volume, selling 31 million litres annually. At Rs 250 crore, it is third in terms of value in the branded market, which is between Rs 13,000 crore and Rs 15,000 crore.

How did Vadilal survive the price war?

While we were selling a 110 ml cone at Rs 15-18 , Amul introduced a Rs 10 cone. So, we too introduced a counter product at Rs 10. That was the simplest thing to do. But then, we improved operational efficiencies, invested in technology and strengthened our supply chain to recover. We have 37 stock points which maintain cold chain, and there are 500 distributors who supply Vadilal to 40,000 retailers across India. Power supply continues to be a bottleneck in rural India. So, Vadilal has provided special deep freezers to distributors to ensure that rural India is not devoid of the pleasure of ice-cream.

So, has Vadilal found its feet back?

Vadilal was never dethroned. The brand is growing at 26% against the industry growth of 15-20 % y-o-y . We are bullish on ice-creams and have invested Rs 100 crore on capacity expansion. We would have our third facility built in East India, at a cost of Rs 40-50 crore, and this would take our tally to 4.5 lakh liters per day by 2013.

What would be the next level of growth for the category?

The per capita consumption of ice-cream in India is at 300 ml against 22-23 liters in developed nations. India's total icecream market size (branded and local) stands at Rs 2,500 crore market compared to Rs 20,000 crore Chinese market. That's what makes me believe in India's ice-cream story. The category will grow as more Indians dig into impulse products—ice cream cups, cones and candies. In fact, ice-creams have broken all psychological barriers and are no more luxury products. While Indians would continue to give preference to any product that justifies value-for-money proposition, there are people who would not think twice before spending Rs 150 on a candy.